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EU Commission President's State of the Union Address 2016: Main takeaways

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16 SEP 2016

On Wednesday, 14 September 2016, the President of the European Commission, Jean-Claude Juncker addressed the European Parliament in his annual 'State of the Union' speech.

The State of Union address, which is delivered by the President of the European Commission every year in September, takes stock of the European Union's (EU) political, economic and social situation and sets out the actions and initiatives the European Commission intends to take in the following year. It also provides the initial framework for the European Commission's work programme for the following year, which will be agreed by between the Commission, the EU Council and the European Parliament in the coming weeks and will outline a detailed list of initiatives to be proposed in the near future.

In his speech, Juncker acknowledged that the EU faced an "existential crisis" and called for a more united and stronger Union, advocating for more integration particularly within the socio-economic sphere and in the area of defence and security. A greater unity and integration of the EU was the central theme underlying the specific initiatives in various areas announced by Juncker in his address. In this regard, Juncker also highlighted the need to stem the risk represented by populist movements, who threaten to fragment the Union.

The Commission President outlined his intention to push forward a range of proposals to strengthen the EU and help it cope with the various challenges it is currently being presented with, ranging from proposals to deepen security and defence co-operation, to ambitious copyright and telecommunications reforms, to measures to increase investment in strategically important projects by doubling the scope and duration of the European Fund for Strategic Investment (EFSI).

The EU initiative and actions announced in the speech focus on the following five key areas:

European Defence and Security

Social Europe

Economic and Fiscal integration

EU as a global player

EU after BREXIT

The speech was followed by a debate in the European Parliament, which demonstrated, that despite the show of support to Juncker by the largest political groups in the Parliament, the way ahead in implementing the announced initiatives and achieving the objective of a greater integration will not be an easy ride for the EU.

In the briefing below you can find an overview of the priority actions discussed by Juncker in his speech, which are expected to dominate the EU's policy and legislative agenda in the coming months. The briefing also discusses the reactions of the main EU political groups to Juncker's speech, and provides DLA Piper's analysis of the main takeaways.

Main highlights

In his State of the Union Speech on 14 September 2016, European Commission President Jean-Claude Juncker focused on the following priority actions and initiatives to be proposed by the European Commission:

European Defence and Security:

Proposal to create a permanent EU military and defence structure, a single headquarters for EU operations and common military assets. The proposal – the President assured - would be developed in full complimentarity with the transatlantic cooperation in NATO. The President also highlighted that the lack of cooperation between EU countries within the defence and security sphere costs the EU between €20 billion and €100 billion a year. This initiative is one of the most radical proposals announced in Juncker's speech and is expected to face a difficult political process and controversy going forward.

Establishment of the European Border and Coast Guard. The proposal, whose primary aim is to reinforce the management and security of the EU's external borders, was adopted by the European Parliament in July 2016. On 14 September 2016 the EU Council gave its final approval on the establishment of the European Border and Coast Guard, paving the way for it to initiate its activities in mid-October 2016.
• Creation of a European Travel Information System. This tool will address the parallel challenges of managing migration flows, the fight against terrorism and organised transnational crime.

Creation of a European Defence Fund. This economic instrument would boost research and innovation within the European defence industry.

Reinforcement of Europol, by providing it with better access to the Member States' databases and more resources - particularly to counter terrorism.

Social Europe:

Further development of the EU Youth Guarantee. With this tool, which has already helped 9 million young people to get a job, traineeship or apprenticeship in the past three years, the European Commission intends to increase opportunities for young people and tackle youth unemployment.

Creation of the European Solidarity Corps, which would allow young people across the EU to volunteer their help where it is needed most, in response to crisis situations like the refugee crisis or the recent earthquake in Italy.

Posting of Workers Directive (proposal currently discussed by European Parliament and Council). President Juncker reiterated the Commission’s commitment to this proposal which is a concrete weapon against social dumping. The objective of this proposal, which to date has a strong opposition from the Member States in Central and Eastern Europe is to ensure that EU workers posted to other Member States receive the same remuneration for their work as the local workers.

Economic and Fiscal integration:

Acceleration of the work on the Capital Markets Union (CMU). In order to make the European financial system more resilient, the CMU aims to expand funding options for businesses, improve incentives for large and small investors, integrate Europe's capital markets and tackle structural barriers in diverging tax systems, insolvency regimes and securities laws.

Strengthening of the European Fund for Strategic Investments (EFSI). Juncker called the EFSI, launched two years ago to mobilise investment in strategic projects a success and announced that the Commission will double the duration and financial capacity of the fund providing a total of at least €500 billion of investments by 2020.

Application of the Stability and Growth Pact. The President highlighted that the Pact should be implemented with the flexibility that was built into the rules, in order to support and not punish ongoing reforms in Member States.

Implementation of the EU General Data Protection Regulation, adopted by the EU institutions in May 2016.

Revision of Europe's copyright rules. On 14 September 2016, the European Commission published a package of proposals to reform EU copyright, including a Commission communication on "Promoting fair, efficient and competitive European copyright-based economy", a draft EU Regulation on the exercise of copyright and related rights, a draft EU Directive on copyright in the Digital Single Market, a draft Regulation on cross-border exchange between the EU and third countries of copyright-protected works for blind and visually impaired people, and a draft Directive on permitted uses of copyright-protected works for blind and visually impaired people. Juncker highlighted that the ambitious package has a clear focus on empowering European artists, creators, journalists, publishers and authors and protect their works.

Reform of the European telecommunications markets. On 14 September 2016 the Commission published it's connectivity package. The package aims at creating a new legal framework that attracts and enables investments in connectivity, and sets the objective of deploying 5G across the EU as of 2018, equipping main public centres of every European city and village with free wireless internet by 2020 among other objectives.

Abolishment of the mobile roaming charges. Juncker promised a new proposal, drastically reducing the cost of roaming for consumers, in the coming weeks.

Ensuring fair taxation across the European Union. President Juncker took pride in the fight against tax evasion conducted by the Commission in the past year and confirmed that they will continue to protect consumers against cartels and abuses by powerful companies.

EU as a global player:

Launching of an Investment Plan for Africa and the Neighbourhood with the potential to raise €88 billion in investments. The logic behind it is to use public funding as a guarantee to attract public and private investments to create real jobs and stability. The fund is intended to complement EU development aid and aims at addressing one of the root causes of migration.

Enhancement of the role of the High Representative to become a European Foreign Minister. By pooling together their forces, European diplomatic services would increase their leverage in international negotiations, and carve a more prominent role for the EU in world diplomacy.

Designing a European Strategy for Syria. According to President Juncker the EU – represented by the High Representative of the Union for Foreign Affairs and Security Policy Federica Mogherini - should have a seat at the table when the future of Syria is discussed so that Europeans can contribute in rebuilding Syria as a peaceful, pluralistic and tolerant nation.

Reiteration of the EU's commitment to Free Trade and the commission intention to push forward with the ongoing free trade negotiations and the recently reached agreements. Juncker praised the EU-Canada free trade agreement "the best and most progressive deal the EU has ever negotiated", promising to work towards the ratification of the agreement as soon as possible. The Commission President further emphasised the EU's leading role in global trade, stating that the EU is the largest trading bloc with trade agreements in place or under negotiation with over 140 partners across the world.

Implementation of the Paris Agreement on Climate Change. Juncker called Member States to swiftly implement the Paris agreement on Climate Change, stating that slow delivery on promises may undermine the EU's credibility on the global stage.

Europe after Brexit

Triggering of official negotiations on Brexit. President Juncker stated that the EU deeply regretted the decision of the UK to leave the Union, but that such a decision must be respected. He further called on the UK to formally notify the EU of its intention to leave as soon as possible. He also noted that, in order to gain access to the EU's internal market, the UK will have to accept the four freedoms - namely the free movement of goods, capital, services, and people.

White Paper on the future of the EU. The European Commission will set out its vision on the future of the EU in a White Paper in March 2017, in time for the 60th anniversary of the Treaty of Rome, taking into account the political and democratic challenges that the Union of 27 will face in the future.

Political reactions

Overall, President Juncker's State of the Union was welcomed by the leaders of the three major political groups in the European Parliament: the European People's Party (EPP), the Progressive Alliance of Socialists & Democrats (S&D) and the Alliance of Liberals and Democrats for Europe (ALDE). It is not a coincidence that these parties are also the strongest supporters of the European project, as they most likely wanted to give a message of unity in support of the European Institutions. Although only briefly mentioned by Juncker in his speech, Brexit has been one of the most debated items by the members of the European Parliament. The comments, however, mostly reiterated already well known positions.

The European Conservatives and Reformists Group (ECR) and Eurosceptic groups, such as Europe of Freedom and Direct Democracy (EFDD) and Europe of Nations and Freedom (ENF), expressed criticism for the Commission's push for more Europe. The ECR representative, MEP Syed Kamall, bluntly stated that by responding with more integration to European citizens’ concerns about EU interference with Member States sovereignty, the Commission is neglecting to listen to the people. Marine Le Pen (ENF) promised that she will organise a referendum on France's EU membership, if elected as French President in the elections scheduled in 2017. Nigel Farage (EFDD) stated that the EU needs the UK's market more than the UK needs the EU.

DLA Piper Comment

A missed opportunity - It was a rather uninspired and poorly delivered speech. Juncker failed to reach out to the European Citizens. He sounded as if he was addressing his own bureaucrats.

In his speech President Juncker rightly assessed the situation faced by the EU as "existential crisis" as the coming year will present a significant challenge for the EU institutions to regain the public trust in the European project and keep the union together. The recent political developments, including the rise of populist movements and the UK's decision to leave the EU indicate that this will be difficult task, requiring a strong unity and resolve.

Interestingly, while one of the most important events this year in the European Union has been the UK Referendum on EU membership, President Juncker did not spend more than a few words on it, showing that the EU's position on Brexit remains steadfast and clear. Instead, the Commission seems to be fully focusing on the post-Brexit phase, trying to prove that this event does not represent the beginning of the end of the European project, but rather an opportunity to reform and improve it.

It is clear that the European Commission is calling for more European integration, particularly in the field of defence and security, international trade and diplomacy. At the same time, President Juncker has tried to give the European project a more human face, reminding people why the Union was created, what it has achieved and what it can do for its citizens. He acknowledged the challenges Europe is facing in terms of migration, terrorism, growth and employment and called specifically upon Member States to work together to tackle them. Much emphasis was put on the word “solidarity” in what can be seen as a call to everyone, but especially Member States, to put aside individual perspectives and work towards addressing issues collectively.

The European Commission's initiatives within the socio-economic and financial spheres pose both challenges and opportunities for European companies, which should stay engaged with the EU's institutions in order to capitalise as much as possible on the proposed actions, measures and initiatives in the coming year. Both the copyright and the telecom reforms, for instance, are expected to generate fierce debate among stakeholders and, whatever the final result will be, it will undoubtedly considerably affect the industries concerned.

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DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific, positioning us to help clients with their legal needs around the world.